Analyze the Following Case

MOBICA asked its Production and Operations Manager to develop an aggregate plan given the forecast for the units demand shown below for the next 8 months. The Production and Operations Department has a normal capacity of 160 units per month and overtime capacity for 5 units. The normal output has a cost of $70 per unit; the overtime has a cost of $100 per unit; and the subcontracting has a cost of $100 per unit. On the other hand, the beginning inventory is zero units, the inventory carrying cost is $3 per unit of average inventory, and the backlog cost is $5 per unit.

Required:

Formulate an aggregate plan that allows level production, uses inventory to absorb fluctuations and allows backlogs.Formulate an alternative chase plan that matches the output with the forecasted demand, while using first overtime (with a maximum of 5 units), then subcontracting, to satisfy the excess in the demand (if it exceeds 160 units).

Month	1	2	3	4	5	6	7	8	Total
Forecast	150	165	170	150	155	155	170	165	1,280